With startups and scale-ups generating around €4bn in venture capital funding in 2020 alone, Germany is rapidly cementing its status as one of the worlds premier hubs for technological innovation. Increased investment in AI research has been a major catalyst behind this growth, with experts forecasting that the artificial intelligence market will account for 11.3% of German GDP by 2030 (€430bn), more than any other European Nation.
This is reflected in the composition of the German workforce, with over 1 million people employed in the tech industry and over 5000 live Data Science vacancies at the time of writing.
As it stands, Berlin and Munich dominate the German landscape for AI start-ups, with 63% located in the so-called “Big 2”. Berlin in particular is a major player on the Global stage, boasting a strong network of data science talent, investment opportunities and research institutions. This is reflected in the city’s 11 tech Unicorns, more than anywhere else in Europe.
There are a number of factors behind this proliferation of AI start-ups, most notably extensive government investment and collaboration between industry and academia, an alliance that has created a vibrant network of tech entrepreneurs with access to venture capital funding.
While much of the growth in the AI market can be attributed to the increased adoption of cloud-based applications and connected devices, the German government have played a key role in nurturing the county’s status as one of the world’s premier AI hubs, not only embracing the potentials offered by automated technology, but also planning for their impact.
In 2018 the German Government launched their Artificial Intelligence strategy, developed jointly by the Federal Ministries for Economic Affairs and Energy, Labour and Social Affairs, and Education and Research. While outlining the progress the country has made in AI research and how it has impacted the economy, the report also sets out a series of goals as well as the government policy that will underpin their success.
One of the primary aims of the strategy is to consolidate Germany’s status as the centre of AI research in Europe, allowing them to effectively compete with the likes of China and the USA globally. To that aim the Government have pledged to invest €5 billion in AI by 2025, a €2 billion increase from the initial figure announced in 2018.
The funding will be used largely to foster the attractiveness of the country Internationally, improving remuneration and working conditions in order to attract and retain the best talent. A major focus will also be on establishing a robust framework to prepare current and future generations for the changes that will be brought about by advancements in AI. The Opportunities for Qualifications Act, for example, legislates re-skilling and training opportunities for employees in traditional industries whose jobs are most at risk as technology advances.
The Mittelstand 4.0 centres of excellence also aim to provide “AI trainers” that will contact 1000 SME’s a year, ensuring all parts of the economy are prepared for, and well-placed to capitalise on future innovations.
Bridging the economic gap, and competing with the likes of China and the US internationally is just one aspect of the artificial intelligence strategy. The Government also aim to be global leaders in AI ethics, using technology to promote citizens’ rights, freedom of action and social participation.
Perhaps more so than any other Nation, the German government have been vocal about the need for a robust framework to tackle the issues arising from data storage and protection, advocating dialogue between European member States to create an ethical framework that aligns with existing EU regulations.
The issue of Governance in AI, and the need for legislation to ensure technology is not misused, is one that is increasingly prevalent. By being ahead of the curve in this regard, Germany appears to be well-placed to adapt to any changes that future legislation may bring about.
While Government policy has played a key role in nurturing Germany’s burgeoning AI scene, the collaboration between corporations, academic institutions and well-funded research centres has proven equally pivotal.
Located in Baden-Württemberg in the Stuttgart-Tübingen region, Cyber Valley epitomises Germany’s commitment to AI research.
Founded in 2016 by the Max Planck Institute for Intelligent Systems and the Universities of Stuttgart and Tübingen, along with partners including Daimler, BMW, Bosch and Amazon, Cyber Valley is Europe’s largest AI research consortium and has created a thriving ecosystem that promotes collaboration between science and industry.
The consortium was set up with the aim of leveraging AI technologies to improve productivity across industry, services and products, while fostering a breeding ground for successful start-ups, a strategy that is already paying dividends.
Baden-Württemberg’s Minister of Science Theresia Bauer, outlined what the consortium means to the future of German AI research.
“In just a few years, Cyber Valley has managed to attract the best international AI talent and establish excellent networks with the top locations for AI research in the world. “With a major joint effort, we can now achieve a breakthrough, bringing Cyber Valley into the top league worldwide and keeping it there. Because we want to make rapid progress in the development of a European AI.”
Having already nurtured a host of Unicorn start-ups, including Flixbus, Celonis and wefox, the German AI market shows no signs of slowing down, with a recent report stating the sector will grow at a CAGR (compound annual growth rate) of 34.1% by 2025.
Astute government policy and consortiums like Cyber Valley look set to ensure this growth will extend far beyond that period.
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